Pretty New, But Doing Pretty Well

The stock market’s recent bullish run has pushed on in recent trading days, with both the DJIA, the S&P 500, the FTSE 100  and the DAX all hitting six-month highs last week.

One area of support for the US stock market has come by way of the Fed’s recent more dovish approach to monetary policy. At the March FOMC meeting, the central bank amended its forecasts for 2019: having previously signalled further rate hikes this year, the latest forecasts point to no further rate hikes in 2019. Minutes from that meeting are set to be released this Wednesday, affording a more in-depth look at the discussions that lay behind this change in stance.

Further impetus for market movement could come in the form of earnings announcements, as we head into the US corporate reporting season. Things kick off with earnings reports on Friday from banking giants JP Morgan and Wells Fargo and we will enter full-swing into earnings season next week.

Today’s top trader has a fairly limited track record, but in this short span of time has managed to string together a sizeable amount of winning trades. The trader is called PrettyGoodTrader. Let’s look at their numbers.

As we’ve already said, we can see the limited track record, as evidenced by the account only trading with real money since January of this year. Over the life of the account, though, they have managed to rack up profits of almost 7%, while allowing a maximum drawdown of just 6.23%. Along with a reasonably low risk score of 3 and volatility below 2%, trading for this accounts appear to have been run with quite tight reins in terms of risk management.

Let’s see if the monthly profit and loss breakdown can help shed any further light on this account.

There isn’t as much to go on as we would normally like, but they have managed to turn a profit in three our of the four months that they have been operating. Even more encouraging is that the amount they dropped in the sole losing month was small in comparison to the amounts gained in the winning months. The evidence so far, limited as it is, points to a favourable ratio of risk to reward.

Finally, let’s consider the diversity of the instruments with which they have been trading.

This is a much wider broader array of assets than we commonly see from the traders we look at. In terms of asset classes, there is a heavy leaning toward stocks, but included in that big chunk of ‘Others’ there are a number of commodity trades. In terms, of how the stock exposure breaks down, though, there is a substantial amount of portfolio diversification on display, with no single company dominating the picture.

Overall, this is clearly a new account and as such, it should be considered with some caution right now. We would need to wait until such a time as if and when they have built up a more convincing track record of positive performance in order to amend that verdict. But, as we have discussed, there are some encouraging signs on display, which make this an account that might be worth keeping tabs on.

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